Insurance companies currently offer various incentives to encourage a customer to reduce risks covered under an insurance policy. Insurance companies also offer or partner with service providers that offer various kinds of risk reduction or loss prevention programs, services, and/or technology to help customers to reduce risks or to prevent losses. This is because risk reduction and loss prevention is beneficial to both the insurance companies and their customers. One example of the incentives offered is an insurance premium discount, typically determined based on insurance related data including historical insurance data of a customer. Another example of the incentives offered is a dividend offered to customers at the end of an insurance term based on the performance of the dividend group they belong to. For such programs, customers are typically assigned to dividend groups based on the industries to which they belong.
The dividend option differs from premium discounts in important ways. First, the insurance premium discount is typically determined and applied at the beginning of an insurance term, whereas the dividend is determined and applied at the end of an insurance term. Second, discounts are reflective of anticipated loss or risks to be incurred by a customer during the insurance term, whereas dividends are determined based on actual loss savings incurred by the customer. Third, discounts provided to a customer are calculated based on the customer's own risk, whereas a dividend for a customer is determined based on information about a group of customers in the aggregate.
As mentioned above, customers are assigned to dividend groups based on the industry that they belong to and not based on whether or not or how the customers manage their risks or prevent losses. Thus, there exists a need to invite a group of safety oriented entities or individuals seeking to form their own dividend group to share profits derived from their prevented losses. Additionally, to more fairly reward customers who are more safety oriented or proactive at loss prevention, there exists a need for providing dividend plans to customers participating in loss prevention programs. There exists another need for determining an individual dividend using a multi-tier approach so that customers within different tiers of a group are provided with different amounts of dividend. Finally, there exists a need for an automated system for administering such dividend plans.